Investors are keeping their powder dry until the U.S. Federal Reserve makes its final planned rate decision of the year,

Investors are keeping their powder dry until the U.S. Federal Reserve makes its final planned rate decision of the year, as a result, stock markets open slightly lower on Wednesday.

The most recent U.S. consumer price report revealed cooling inflation trends, which was good news for investors. However, the early strong gains on Wall Street were quickly sold into out of caution prior to the end of the Federal Reserve's two-day policy-setting meeting, resulting in the broad S&P 500 index posting gains of only 0.7% at the close.

Even while the pace of price increases is expected to slow down—after four consecutive 75 bps increases—a 50 basis point increase is largely anticipated later on Wednesday—there are concerns that this would result in interest rates staying higher for longer.

The words made by Fed Chair Jerome Powell and the "dot plot" predictions of interest rate movements over the coming several months are now the main points of attention.

Back in Europe, on Thursday, the major central banks are likely to announce their most recent rate decisions, with rate increases of 50 basis points expected from both the European Central Bank and the Bank of England.

Consumer prices in the UK increased by 0.4% on a monthly basis in November, bringing the annual increase to 10.7%. This was a slight decrease from the previous month's 11.1% increase, but it was still enough to put pressure on the Bank of England to continue tightening monetary policy.

Data on industrial production in the Eurozone for October are likely to show a decline of 1.5% month over month later in the session as the area struggles with skyrocketing energy prices.

Given that both Inditex, a fashion retailer, and Tui, a travel company, are expected to announce their quarterly earnings, they will be the focus of corporate news.

The recent spike in crude oil prices came to an end on Wednesday as industry data revealed an unexpected increase in U.S. crude inventories, raising concerns about the sustainability of demand in the largest consuming country.

U.S. inventories unexpectedly increased by 7.8 million barrels last week, according to data from the American Petroleum Institute, despite expectations that they would decline significantly due to the Keystone pipeline's failure. Later in the session, the Energy Information Administration is set to provide official data.

Finally, a mix of supply concerns and anticipations that Chinese demand will increase once COVID limitations are lifted, was one of the reasons why both U.S. and Brent crude had rallied over the previous three sessions.

Key Events:

• Crude Oil Inventories at 15:30 GMT.
• FOMC Statement at 19:00 GMT.
• Fed Interest Rate Decision at 19:00 GMT.

(Sources: investing.com, reuters.com)